Episode 2: Building a SaaS Flywheel: Growing a partner friendly ecosystem with Hubspot

This week on the Xero Developer Podcast, Dan and Nick chat with Scott Brinker(@chiefmartec), VP of Platform Ecosystem at Hubspot about scaling partner programmes, building a great ecosystem and the potential for t-shirt cannons.

The team find out how a SaaS Marketing company and a SaaS Accounting software see platforms as a large part of their future. And what the current efforts of both companies have led to; from tiered partner programmes, to the importance of defining white space and grey space in the ecosystem.

They discuss that having a platform adoption partner to train end users, also helps with longterm app adoption and is an essential part of a healthy ecosystem. And just how hard is it to stand out in the SaaS market? Listen now to find out all this and more!

Episode transcript

DY: So yeah, we've been doing a lot of social stuff and community engagement work for quite a while now. The last few years on our main channel has been our Dev TV videos, how-to guides, and things like that, but we've sort of decided to branch out a little bit and do some more kind of industry thought leadership-y type things, and talk with some friends and other people around SaaS platforms in general.

NH: Yeah, look, I think the series, we're calling it Fly Wheel, and we're really talking to friends and partners who have built developer platforms and ecosystems at scale. It's such an interesting part of the technology landscape, and really, there's a small number that have got to any sort of scale. And it's really interesting to understand how they built it, what are the challenges that they face, and what does it mean for anyone else who's working with platforms or looking to build a platform of their own. Now, Dan, I don't know if you know this about me, I'm a bit of a HubSpot fan. My background is marketing and technical marketing, and if you're a marketing technologist and a content marketer, HubSpot's a really important brand and a really amazing platform. So I'm pretty excited about the guest we've got on today, and really looking forward to hearing some of the stories from Scott and learning a bit about his background.

NH: I would like to introduce Scott Brinker who's the VP of platform ecosystem at HubSpot. Welcome to the show, Scott.

SB: Thank you. I'm really excited to be here with you guys, talking platform dynamics. Yeah, there aren't that many people in the world that you just could sit at a bar and have that conversation with.

NH: And that's what we're doing. We're sitting at a bar in three different time zones.

SB: I close my eyes, and I can almost smell the peanuts.

NH: So Scott, as I said, I'm a big fan of HubSpot, and I think anybody who's listening to this who's got a marketing or technology background would be, but maybe for those that don't, we'd love to just get that elevator pitch on what HubSpot is, and maybe your role there.

SB: Sure. So, HubSpot is a product company that's evolving to increasingly be a platform company, really in the space of the front office. So it started with a marketing product, It's added a sales product, an underlying CRM to support both of them, and has also announced a customer service app that will plug in together. So the company has grown tremendously here over the past ten years. It's become a public company. Tens of thousands of customers, primarily small businesses that are leveraging this for marketing and sales, and yeah it's been, I mean, they've had APIs for a while, because this is a world where everyone has APIs and everyone has to interconnect with everything else, but I think one of the things that's really exciting with me coming in this past year, is HubSpot's really wanting to think much more consciously, just be much more thoughtful about supporting developers and a developer ecosystem around HubSpot as a platform.

NH: I'm really pleased to see that, in your job title, VP platform ecosystem, that you have ecosystem. I think you're the only other person I've met so far who has ecosystem in their job title. Mine is GM ecosystem, and at least I don't have to explain to you that I'm a marine biologist or that I'm working on other ecosystems. Talking to other friends in the industry, it's a really important term. I'd love to understand a bit more about how you guys see the ecosystem.

SB: Yeah. You know, it's funny, while I was talking with them about joining, they were very flexible on what my title was, "And also it's platform something strategy," and yeah, I'd suggested ecosystem, and I think they kind of looked at me like it's a little bit strange, like, "Haven't heard that title very much." But I'm with you, and part of the reason I advocated for it is because, sometimes if you take a title like platform strategy, it tends to be a very inward facing sound to it. Right? It's like, "Oh okay, well what is our strategy?" While that's certainly a part of this, I think what I really love about ecosystem as a label for this stuff, is I think it really forces people to look at the partners, at the people outside of their walls. Like, what are these other developers? What are the dynamics they're going through? What do they want? How do you make this really attractive to them? And I think, given the low barriers to entry in software development in general now and all the incredible technology that's available, and open source, through these cloud infrastructure platforms, is yeah, the ecosystem metaphor also feels like it fits a ... you say it's a marine biologist. Right? This is reef. An incredible explosion of life that's happening out there.

NH: Yeah, I was mulling on it recently, and a platform becomes an ecosystem when everybody who participates in it benefits, and that's fundamentally what an ecosystem is, right? In a marine term or in any other term. And I think, as we've been talking about our platform, we're talking about a community of people that build in it. We really want people to think that this is a platform where everyone who participates gets something out of it, and I think that's why the term lands so well with us and with our audiences.

DY: And also, it's not only about the businesses involved who are really benefiting and thriving. It's about how we create that, or nurture that innovation and drive demand for people building on our platforms, and one thing that we really love seeing, Scott, because you are famous outside of HubSpot and things, and we had a look at your Medium post recently about how to build a platform developers love, and it's something that we've pinned up on our wall. There are seven things which kind of tell you if you're doing a really good job, and what we're doing is actually going back to that and saying, "Okay, so for this quarter, have we been doing these things?" And that's really what I'm about, and both me and Nick wanna be doing, is creating an ecosystem that people will love and want to be a part of.

NH: Yeah, we're going to spend a bit of time going through those key areas today, and really digging into things.

NH: Just before we get into that, I want to quickly talk about your previous role, and particularly, a piece of content that I'm a big fan of and why I'm so excited to get you on the show. Is it true, Scott, that you're responsible for the famous marketing technology Landscape Poster?

SB: Wow. Responsible sounds like I could get in trouble over that. "Is this your fault?" I have been the guy producing that for, my goodness, this is year number eight. Although, yeah, in these past couple of years, I've started to have some help.

NH: There's a lot of logos to put onto that. I think I first saw it in a basement startup in San Francisco. It's just a Silicon Valley story, but I couldn't believe the size of the industry at that point in time, and how many solutions there were, and how confusing it must be for a consumer trying to find the right solution. And as I think about building a marketplace, and building a platform, and how it helps clarify some of the choices for a consumer looking for technology and solutions, I wonder if that's something you've thought about as you've come into this role.

SB: Yeah, absolutely, I mean, the thing about the MarTech space that has just always fascinated me is, we certainly see other places where there's been a lot of this explosion of technology, but at this scale, usually you see that explosion of technology around a platform. Right? I mean, there's millions of apps and Apple's app store and whatnot. Windows is a platform, right? This incredible explosion of people building Windows apps. The thing that was so bizarre to me about the MarTech landscape is all this incredible innovation and diversity of approaches really grew up, quite frankly, outside of platforms. It's very ad hoc of which particular solutions different MarTech vendors would integrate with, and some of this is just the shift of software dynamics in a cloud world. There's a lot more flexibility in how things connect. But it really amazed me that there weren't stronger platforms in the MarTech space, given all this innovation that clearly wanted to happen, so that's what led me to the opportunity at HubSpot was, can HubSpot be one of the companies that helps make that landscape, or at least a subset of that landscape a little bit easier for our customers to navigate and adopt?

NH: We touched on this one when we were talking with Zapier recently, who have something like 1,100 apps in their app store, and as you said there, the opportunities for small businesses and the tools that they can access to get a foot in the door with marketing today, which is so important to being successful and growing. The tools they can access are huge, and you know this because you've been documenting this in a poster for a number of years now. One of the things that you highlight in your article is you need to have a great customer experience for users adopting the products that are on the platform. How have you thought about ways that you help customers make sense of all the solutions in your marketplace, find the best solution and make sure that it's a really seamless experience with HubSpot?

SB: Yeah, it's a great question. For better and worse, I think HubSpot, we're still early enough in our journey were we have around 150 partners, maybe, in the directory at this point in time. Which is a lot, but it's not 5,000. So just making that directory navigable by the sorts of functions that people are looking, or the capabilities they're looking for, implementing a good search capability so someone doesn't have to figure out our navigation, and just come in and say, "Hey, I'm looking for influencer marketing, what do you have?" That's proven to be a really good way to just get people matched to things that they know they're looking for.

SB: I think the other challenge that I think a lot about, and I don't think we've made anywhere near enough progress on this front yet, is this idea of discovery. It's one thing if someone is coming to you because, "Hey, I want a particular solution X," or maybe even, "Hey, can you integrate with particular product Y?" Those cases, yeah, I mean it's pretty straight forward to figure out how to serve those well.

SB: I think the ones that are a little bit more challenging are because there's just so much innovation that's happening out there. People don't even know, necessarily, what's possible, what exists. I think there's a great opportunity for the larger platforms that develop these ecosystems around them, to come up with a really good way of helping to educate, and help people discover what those new possibilities are.

NH: Yeah, look, I think you touched on a very important point there, which is yeah, if somebody knows what they want, them we can help with that, and there's ways you can do that through filtering, and through search, but what if they don't know what they want? Or they don't know that there's a solution to the problem they have? With the size of the customer base that we have now, and the data, I think Xero has 1.2+ million small businesses across all markets in the world, and although there's slight differences in each market, most small businesses are kind of trying to solve the same problems.

NH: With the data that we have, how can we use that to actually recommend solutions that customers didn't know they needed, or were even possible for them? So it's definitely something that we haven't nailed yet, but it's a really big focus for us. How can we create a filtering criteria, so we know what kind of customer you are, we know what problem you're trying to solve? And maybe you haven't even told us that, it's just through the behaviors you're doing in our products, you're invoicing, or you're trying to manage your cash flow.

NH: And contextually, how can we recommend a solution that actually helps you do that better, whether that's a product feature within Xero, or whether that's a solution that's available third party through the marketplace. It's a very exciting space to get into. I know the guys at Zapier were talking about that a lot. A lot of the other teams that we talked to were also trying to think in clever ways around how they can solve that, and make those connections.

SB: Yeah, I think you're absolutely right. I love where you're headed there with being able to use the data on ... I guess Amazon is a classic example of, "People who bought that, or people who like this, also found these other things helpful." It's an oversimplified view of it, but-

NH: It's a good view. I've used the Netflix examples a few times, when trying to advocate for this internally. The screenshot I usually put up is my Netflix, which has ... it recommends for me nothing but children's TV shows, which I think probably just says that I let my kids watch too much Netflix, so it doesn't always work.

SB: But it should recommend which new kids films.

NH: Yeah, exactly.

SB: I also love the idea of ... I think there's one level of looking at those sort of patterns across customers, and almost a very holistic view to making recommendations. But I think there's also a lot of opportunities to look at ... in fact, I think you mentioned this, much more contextual recommendations, that when you see someone working on a particular activity inside a product, and you see the way in which they're doing that, there's some patterns that are very localized to that, but you can really hone in and say, "Hey, wow. If you're looking for ways to possibly augment this, or extend this, these might be a couple other tools you'd wanna take a look at, that plug right in."

NH: One of the unique things about Xero, and our business model, is that we something like 140 thousand accountants and bookkeepers who are also partners of ours, and they work a lot with Xero, and they work a lot with the customer base. When we're thinking about how do we help small businesses find the right solution, we also have the added advantage that we have this advisor network, who can also help them make that decision. One of the challenges, of course, they're very familiar with compliance and doing accounting, and they're less familiar with what are the needs to the small business and the technology space? But we see an interesting trend with a percentage of them, in the probably 15-20% that are really starting to get active in this space.

NH: They recognize that there's a big gap in the market, there's nobody really out there helping small businesses find technology solutions at scale, and we think, at least we'd like to think that we can help them with learning the basic tools to be able to do that. Often, it's as simple as just helping to understand what kind of business it is, is it a retailer? Is it a professional services business? What's the main pain point that they try to solve, and then what are the solutions that some of the other customers are using? And if we can surface that data back to our accounting and bookkeeping partners, and give them the comfort, or the confidence, to go out and say, "Hey, have you thought about using solution X, or using this app? It really helped my business."

NH: I think the ones that are doing that are doing really well. So we kind of see it as twofold, how do we use the data and the tooling to help customers find the right solution? But how do we leverage the rest of our community to do that?

SB: Wow. The parallels between your business and ours are just fascinating to me, because we have a service channel that's over a couple thousand agencies, marketing agencies, that again, have primarily been using HubSpot's core products to help their clients do better digital marketing, and smarter sales. But yeah, the opportunity ... there's a few of them that have already been leading this way of saying, "Wow. It's not just the HubSpot's capabilities, but it's now all these other solutions from the ecosystem, that if we get really good at matching the right extension, the right augmentation to the right client, we can help our clients be more successful. A number of these other things that we pool in might also have service offerings we can wrap around them as well."

SB: So yeah, we're with you. We see a lot of opportunity. And again, it's kind of the same point, it's like software's rarely the bottleneck anymore, right? I mean, if there's something you want to do, there's a piece of software out there that does it somewhere. It's just incredible. The barriers, I think, for organizations, even small businesses, are figuring out how to adapt the use of these tools, the use of the software, to the actual business results they want. Even though they call it marketing automation, it doesn't mean you plug it in, and your marketing is just magically automated for you. There's a learning process that people have to go through.

SB: And so I think in our case, having these agencies who can really help their clients not just find the right tools that enable capabilities, but really teach them how to integrate those capabilities into a larger marketing and sales strategy. I think that makes all the difference in the world to those customers ultimately being successful with it, and then retaining and growing them.

DY: Absolutely, and for us as well, we're about ten years into our journey now, and I think at the beginning we had a couple of developers, and one developer relations person, and it was a very ... well, it wasn't really a formal partner program or anything like that, but we've had to scale that, and dealing with tens of thousands of private developers, and indie developers, and big strategic partners, growth partners, or whatever you wanna call them.

DY: I find it's an interesting kind of thing, when you have to change the way you do things to scale, and you can have less face time. So we've had to develop more of a one to many strategy for a lot of those private developers, and then trying to really nurture that innovation, and help these other partners really grow, and have a bit more close sort of touch. So we've sort of leveled up our partner program over the last six to nine months, and I'm curious about yours, as well.

DY: We noticed that you've got a tiered partner program yourself, is that ... because we'd love to talk to you about how you've found that, and what works for you.

SB: The tiered approach has been here now ... I guess about two years, as they started to really wanna formalize having a partner program. And it made sense that ... I mean, there's a lot of marketing options that HubSpot can bring to Bear, but we can't bring it to Bear for everyone, and there's also this question of different partners who are at different stages of their life cycle, too. There are some that are ready to handle a large amount of demand, and there are others that are still sort of going through some of the earlier stages. So finding ways that you can really, in a merit based way, match the right sort of marketing support to partners who have proven that they're really ready to do that, and scale within your ecosystem, makes a lot of sense.

SB: We have three tiers at the moment, and they are essentially all driven by ... well, not just driven, but the primary gage is actual customer installs. So we have a beta program, that if you get up to ten customers that you've integrated with, we will then list you as a beta partner, you have to go through some certification process for this, as well, to make sure technically things are looking good.

SB: But the idea's that there is an inkling of actual match and demand between our customers and your customers. And once they approach the 50 install mark, we then typically go through a more vigorous evaluation of their product technically. We've done MPS studies from the joint customers. Do the customers actually find this integration helpful? Do they like it? And then if that's passed, they become a certified partner, which opens up a set of co-marketing opportunities.

SB: Then we put another tier when folks cross the 500 install mark, as the premier partners. And again, it's interesting ... we haven't badged that separately in our directory, but basically once people reach that tier, there's even more co-marketing support that we're able to justify making available to them.

NH: Yeah, I think it's a really great explanation and walk through. We recently created a dev program for our app developers as well, and you have to match, I guess, the needs and the resources of the business, with the ... people who work in partnerships generally wanna do everything with everyone, because we're naturally collaborative people, but as you say, that's just not practical with hundreds of partnerships in a marketplace.

NH: So I think it's a delicate act, matching the needs of the business, but also with a customer centric approach. And I like the way you talked about measuring MPS, and looking for the quality of integration, when we thought about how we create those tiers. It really is based on things ... you know, evidence of building a great integration, getting traction within both the customer base, but also within our community. We made a minimum number of reviews, and a minimum standard of reviews of four stars or above, just as a way of incenting people to work on the quality of integration.

NH: When people apply to move up through tiers, we also evaluate what they've done on their integration recently on their product, to make sure that they are continuing to invest in that innovation, and that proposition. It's ultimately a way to help customers make sense of the market, make sense of the solutions, and which ones are popular, which ones have great reviews, which ones have a very deep integration. So I think, as long as you take that customer focused approach, you can have a program which is successful, and meets both the needs of the business, and the needs of your customers and partners.

DY: Cool. And sort of more around the innovation side, again, we have quite a few events that we run to sort of nurture that innovation, and actually get our ecosystem partners talking to each other, to innovate together. You have some events that you guys run, and I'm keen to understand what your plans are this year with your partner day. Is it Inbound 2018?

SB: Yeah. So it's interesting. HubSpot's had a very large conference it runs, Inbound, for a number of years, that try to run as much as an industry conference, as much as anything else. So a lot of the content actually isn't even Hubspot content, it's more broad to marketing and sales content. We've had a partner day for a number of years around our agency partners, but we never really had a dedicated day for our technology partners, the people building these solutions on the platform. So I'm very, very excited that we're launching the first one of those here in the spring that we'll do at HubSpot, and then we'll also do a combined technology partner, agency partner day, right before Inbound, the day before Inbound.

SB: Oh, man. I can't wait. What you described form the experience you had, I think there's such incredible synergy to be gained, certainly from getting partners together, and also getting them to intermingle with each other. But I think also even just getting them to intermingle at scale with the company itself. Going back to what I was talking about earlier, I just see one of my missions here, in the big picture, is just continuing to evolve the culture of HubSpot thinking through the lens of more and more of a platform company. And I think having all those face to face interactions with more and more of that community, I'm expecting that will be one of the key ingredients to that evolution.

NH: Well, I hope it goes well for you. We ran a roadshow last year. We went to six of our locations, and invited our developer partners along, probably 50 or 60 people in each room, just to kind of test things out and see if people would come and listen to us talk about APIs. And they did, and that was nice. I think Xerocon, we're very fortunate we have the vehicle of Xerocon, which has been running for six or seven years now. I've been going to it as a partner. I used to be a Xero partner is a company called Vend, where I was chief marketing officer there.

NH: I think about 12 of them, we'd turn up, we'd exhibit, we'd meet the Xero team, we'd meet a lot of accounts and bookkeepers. I actually tried to explain it to my wife, why I was going to these accounting conferences every year, three times a year, sometimes. She didn't get it. Recently we brought a journalist over from New Zealand, and she wrote this fantastic article, where she said it's the Coachella for accountants, because it does not feel like an accounting conference. It is laser lights, and smoke shows, and bands, it's a really big deal.

NH: As a partner, one of the things I enjoyed most was actually getting to meet all the other apps in the ecosystem, because they were all startups at similar stages of growth, they were solving pain points. We always talk about our marketing stack, we talk about our API, how we'd work with Xero, and how we'd work with other integration partners, and I think that's kind of the power of the platform, is you build that community around it. What's Inbound 2018 gonna be like this year? Is it gonna be a pretty big event?

SB: It's gonna be a pretty big event. I think the one last year was 21,000 people, sure they'll have a larger one this year, too.

DY: Sounds quite big.

NH: Sounds reasonably large.

SB: I'm sure there will be laser somewhere.

DY: Will there be a T-shirt cannon, Scott?

SB: Yeah. If I'm lucky, there'll be an ecosystem T-shirt cannon.

DY: Ooh, yeah.

SB: Actually, I say that as a joke, and I'm sort of thinking, "Hmm, maybe."

NH: Yeah, just fire some absent people.

NH: Scott, one of the things I'm really interested to explore, and you've been working in the marketing technology space for a long time, you've seen a lot of the solutions, and now that you're managing a platform with a lot of partnerships ... we talk about this quite a bit, this idea of channel of conflict, and obviously the technology landscape goes through phases of innovation and then consolidation, where platforms become very large, and then they maybe start to consume some of the platform. Have you got any lessons you can share about platforms that have handled that well, and platforms that haven't handled it so well, and what are some of the things you might look out for in your own business, as you maybe produce products that are similar to some of your partners, and to some of those interesting areas.

SB: Yeah, that's a great question. I'd probably get myself in trouble naming names, but I think it's kind of interesting. I went through the thought exercise very recently. For instance, one of the things you do, I'm sure you guys do this, when you're working on an ecosystem strategy, there's the question of leg space. Where are the places that we're not gonna develop, and we'd really love to work with partners who are. And that's great, everyone wins on carving out those.

SB: The things that are much more interesting, is the gray space. The area where we're gonna have a capability along these lines, we're gonna have some level of functionality for this, but there's more than one approach to how you do this. Some of it might be just different ways of addressing the problem, that would resonate differently with different customers, some of it might be the extent, the degree, how far do you go on a particular feature, a capability?

SB: I actually think there's so much opportunity in ecosystems for solutions that, from the 50,000 ft level, you look at and you say, "Oh, well there's competitive overlap here." Yeah there is, but the benefit that is potentially there to match those third party products with the right customers in your platform, who really take advantage of that capability. It doesn't have to be a zero sum game. At the end of the day, this is the goal of the platforms. Right?

SB: You've succeeded when you become ... forgive me for this, "The Hub, HubSpot," you've succeeded when you become the hub. You become the center of gravity that serves as that sort of orchestrating engine for all of these other applications, too. And if you're gonna go around picking fights with different applications that are plugging in, you can't moved forward with that.

SB: But i think it's far, far better to have a competitor plugged in to your hub, at the expense of a particular application in your product suite, than to say, "No, no, no, no. It's our products, or none at all." I think that's actually the fundamental difference between a product company and a platform company.

NH: Yeah, you hear you on that. I think one of the things we've thought about a lot recently is, it really comes down to having great relationships with your partners, and having that trust, and having a regular dialogue, and working together on that product strategy.

NH: You say that gray space area, maybe we wanna develop a little bit in that space, but it's a pretty big market out there, and it's very rare that you find a solution that does everything for all customers. And even if you create a feature that's similar to some of your third party, the likelihood is that 80% of your customers are gonna reach the limit of that feature, and they're gonna need another solution that may solve that.

NH: So I think being clear on that with your partners is one of the ways to mitigate some of that. But having a platform that's core to your company culture, is also another way to ensure that you include that in your overall product strategy. There are some who do it well, and there are some that don't do it so well. And like you say, if we name any names, we may get in trouble.

SB: Somehow I just expect the audience who are really into platforms in this space, yes. Examples pop to mind right away, but we'll just leave that as an exercise for the listener.

NH: A couple of questions, I think, before we kind of close out our ... what does a successful year look like for you in 2018 at HubSpot, and specifically in your platform?

SB: Great question. It's a long list of things I'd like to see us do. I think at the end of the day, my number one metric is how are we moving the needle in customers successfully leveraging ecosystem products? We've got great momentum with that now, and fairly ambitious about how we'd like that to grow here over the rest of 2018.

SB: So that's my number one focus. I think sort of deeper down, again, HubSpot's in this transition into being more of a true platform company, and so I think there's just a lot of infrastructure to put in place, just making programs across everything from developer relations, to capabilities in our directory, to other kinds of marketing programs with the developers in our agencies. There's just a lot of things here, where I think to put more structure and foundation in place, it just makes it easier for developers to take advantage of this, and ultimately reach an influence for customers.

SB: I will consider our progress on that ... if we get a tenth of the way with all the things I'd love to see us do, I'll say we're at least on the right path.

DY: Nice, cool. Thanks Scott. So if people wanna find out more about HubSpot, where should we send them?

SB: HubSpot.com. But certainly, if anyone wants to reach out to me on platform stuff, I am just sbrinker@HubSpot.com.

NH: What's your email address, for everyone else who wants to contact you about something?

NH: My email address is dan.young@xero.com.

NH: Every time we close these talks, I always say the same thing, which is I could just keep going for another couple of hours. I feel like we've covered a lot of really good ground, but there's just so much more ground I'd love to cover on so many interesting subjects. We'll have to pick it up in person at an actual bar, when we're in the same timezone, Scott. So I'm really stoked to have you on the show, thanks for being one of our inaugural guests, and hopefully our five or six listeners who download this podcast will really enjoy hearing what you have to say, and will reach out, and maybe you'll get some people coming to talk to you about working with the HubSpot platform, too.

SB: Great. Well, thank you so much for having me on, guys. Really loved this conversation.

DY: Cool, yeah. Thanks Scott, really appreciate it. For those of you out there who are keen to learn a bit more about the Xero developer program, just head on over to developer.xero.com.